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BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE RULISON FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-100 |
This cause came on for hearing before the Commission at 9:00 a.m. on September 22, 2008, in the Sabin-Cleere Conference Room, Building A, Colorado Department of Public Health and Environment, 4300 Cherry Creek Drive South, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the lease line, for certain lands in Township 7 South, Ranges 93 and 94 West, 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
FINDINGS
The Commission finds as follows:
1. Laramie Energy II, LLC (“Laramie Energy”), as applicant herein, is an interested party in the subject matter of the above‑referenced hearing.
2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
4. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. The below-listed lands are subject to this Rule for the Williams Fork and Iles Formations:
Township 7 South, Range 93 West, 6th P.M.
Section 18: Lot 2 (39.99 acres), Lot 3 (39.95 acres), Lot 4 (39.90 acres), SE¼ NW¼, NE¼ SW¼, NW¼ SE¼ and NE¼ SE¼
Township 7 South, Range 94 West, 6th P.M.
Section 13: Lot 2 (39.14 acres), Lot 3 (39.48 acres), Lot 4 (39.83 acres), W½ SE¼ and SW¼ NE¼
5. On August 4, 2008, Laramie Energy, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres for the below-listed lands, for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 7 South, Range 93 West, 6th P.M.
Section 18: Lot 2 (39.99 acres), Lot 3 (39.95 acres), Lot 4 (39.90 acres), SE¼ NW¼, NE¼ SW¼, NW¼ SE¼ and NE¼ SE¼
Township 7 South, Range 94 West, 6th P.M.
Section 13: Lot 2 (39.14 acres), Lot 3 (39.48 acres), Lot 4 (39.83 acres), W½ SE¼ and SW¼ NE¼
All future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands should be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
Except as previously authorized by order of the Commission, wells to be drilled under this application will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception. In addition, all wells drilled to the Iles Formation will be drilled only in connection with the drilling of Williams Fork Formation wells.
6. On September 9, 2008, Laramie Energy, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the application.
7. Testimony and exhibits submitted in support of the application showed that lands in the immediate vicinity of the application lands have been approved for 10-acre well density for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations. Additional testimony indicated that the application lands consist of approximately 518 acres.
8. Testimony and exhibits submitted in support of the application showed that the geologic model of the Williams Fork Formation in the major producing areas of the Piceance Basin is well understood and consists of extensive log, completion and reservoir engineering data from wells inside current 10-acre density areas and the extremely useful and representative nearby outcrops of producing rocks. Additional testimony indicated that based upon outcrop studies, the majority of the discontinuous sand bodies within the Williams Fork Formation are smaller than the distance between wells drilled on a 10-acre density basis, and that the mean sand width found in the outcrops and existing wells will also be present under the application lands. Further testimony showed that the Corcoran sands of the Iles Formation were deposited in a similar environment as the Williams Fork Formation, and that it is predicted that the Corcoran sand distribution with be similar to that of the Williams Fork Formation and that it may be gas-bearing in the area. Testimony indicated that 10-acre density drilling is necessary to develop the Williams Fork and Iles Formations underlying the application lands.
9. Testimony and exhibits submitted in support of the application showed that the application lands are surrounded by acreage approved for 10-acre well density, and that there are no known differences in the reservoir between the application lands and those surrounding lands. Additional testimony showed that a nearby Williams Fork Formation well is draining approximately 6 acres, and that Iles Formation wells in lands adjacent to the application lands are draining approximately 17 acres. Further testimony indicated that stand alone Iles Formation wells are not commercial. Testimony indicated that the most efficient and economic method to recover Iles Formation reserves is through joint development with the over-pressured Williams Fork Formation sands to help lift associated water and increase ultimate recoveries from both reservoirs.
10. The above-referenced testimony and exhibits show that the proposed increased well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
11. Laramie Energy II, LLC, agreed to be bound by oral order of the Commission.
12. Based on the facts stated in the verified application, having received no protests, and based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the lease line for certain lands in Township 7 South, Ranges 93 and 94 West, 6th P.M. for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that the equivalent of one (1) well per 10 acres is hereby allowed for the below-listed lands, for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 7 South, Range 93 West, 6th P.M.
Section 18: Lot 2 (39.99 acres), Lot 3 (39.95 acres), Lot 4 (39.90 acres), SE¼ NW¼, NE¼ SW¼, NW¼ SE¼ and NE¼ SE¼
Township 7 South, Range 94 West, 6th P.M.
Section 13: Lot 2 (39.14 acres), Lot 3 (39.48 acres), Lot 4 (39.83 acres), W½ SE¼ and SW¼ NE¼
IT IS FURTHER ORDERED, that all future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception. In addition, all wells drilled to the Iles Formation shall be drilled only in connection with the drilling of Williams Fork Formation wells.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.
IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.
IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.
ENTERED this__________day of September, 2008, as of September 22, 2008.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
September 23, 2008